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Tag: civil asset forfeiture

A quick glance at the Federal Register (Vol. 80, No. 37, p. 9987-88) today reveals that Attorney General Eric Holder, who earned cautious praise last month for a small reform to the federal equitable sharing program, has now delegated authority to the Director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to seize and “administratively forfeit” property involved in suspected drug offenses. Holder temporarily delegated this authority to the ATF on a trial basis in 2013, and today made the delegation permanent while lauding the ATF for seizing more than $19.3 million from Americans during the trial period.

Historically, when the ATF uncovered contraband subject to forfeiture under drug statutes, it was required to either refer the property to the DEA for administrative forfeiture proceedings or to a U.S. Attorney in order to initiate a judicial forfeiture action. Under today’s change, the ATF will now be authorized to seize property related to alleged drug offenses and initiate administrative forfeiture proceedings all on its own.

The DOJ claims this rule change doesn’t affect individual rights (and was thus exempt from the notice and comment requirements of the Administrative Procedure Act) and that the change is simply an effort to streamline the federal government’s forfeiture process. Those who now stand more likely to have their property taken without even a criminal charge may beg to differ.

Further, the department claims that forcing the ATF to go through a judicial process in order to seize property requires too much time and money. Whereas an “uncontested administrative forfeiture can be perfected in 60-90 days for minimal cost […] the costs associated with judicial forfeiture can amount to hundreds or thousands of dollars and the judicial process generally can take anywhere from 6 months to years.” In other words, affording judicial process to Americans suspected of engaging in criminal activity takes too long and costs too much.

Considering the growing controversy over the abuse of civil asset forfeiture at the federal and state levels, the Institute for Justice’s newly released report on the IRS’ questionable use of the practice is perfectly timed.

An excerpt from the executive summary:

Federal civil forfeiture laws give the Internal Revenue Service the power to clean out bank accounts without charging their owners with any crime. Making matters worse, the IRS considers a series of cash deposits or withdrawals below $10,000 enough evidence of “structuring” to take the money, without any other evidence of wrongdoing. Structuring—depositing or withdrawing smaller amounts to evade a federal law that requires banks to report transactions larger than $10,000 to the federal government—is illegal, but more importantly, structured funds are also subject to civil forfeiture.

Civil forfeiture is the government’s power to take property suspected of involvement in a crime. Unlike criminal forfeiture, no one needs to be convicted of—or even a charged with—a crime for the government to take the property. Lax civil forfeiture standards enable the IRS to “seize first and ask questions later,” taking money without serious investigation and forcing owners into a long and difficult legal battle to try to stop the forfeiture. Any money forfeited is then used to fund further law enforcement efforts, giving agencies like the IRS an incentive to seize.

Data provided by the IRS indicate that its civil forfeiture activities for suspected structuring are large and growing…

For the uninitiated, under the Bank Secrecy Act of 1970, financial institutions are required to report deposits of more than $10,000 to the federal government. The law also makes it illegal to “structure” deposits in such a way as to avoid that reporting requirement. Under the IRS’ conception of the law, “structuring” may be nothing more than making several sub-$10,000 deposits, without any further suspicion of particular wrongdoing. For obvious reasons, many small businesses and individuals can find themselves on the wrong side of this law without any criminal intent.

When the structuring law is combined with the incredibly low burdens required for the federal government to seize assets through civil forfeiture, the potential for abuse is self-evident. While the lack of criminal intent may protect against criminal structuring charges, it is no barrier to the government’s overbroad power to initiate civil proceedings against the money itself.

IJ’s report, authored by Dick M. Carpenter II and Larry Salzman, goes in depth to reveal the history and unbelievable breadth of the IRS’ civil forfeiture regime, the perverse incentives it creates for government agencies, and the individual livelihoods it threatens and destroys. IJ makes the case for much stronger protections for private property rights (including the outright abolition of civil forfeiture as a government power).

Be sure to check out the full report, as well as the Institute for Justice’s other work on asset forfeiture and private property here.

For more of Cato’s recent work on civil forfeiture, see Roger Pilon’s recent National Interest article here, my blog post here, and a recent podcast here.

Referring to the federal government’s forfeiture regime as “an important tool” in fighting crime, attorney general nominee Loretta Lynch staunchly defended the concept of civil asset forfeiture during the first day of her confirmation hearings.

After Sen. Mike Lee (R-UT) questioned the “fundamental fairness” of Americans having their property taken by the government without any proof (or often even suspicion) of criminal wrongdoing, Lynch asserted that there are “safeguards at every step of the process” to protect innocent people, “certainly implemented by [her] office … as well as an opportunity to be heard.”

Even setting aside the litany of federal civil asset forfeiture abuses that have come to light recently across the country, Lynch’s reference to her own office’s handling of civil forfeiture is particularly concerning.

Lynch is currently the U.S. attorney for the Eastern District of New York, and her office, despite its safeguards, is responsible for one of the more publicized and questionable uses of the asset forfeiture program. In May of 2012 the Hirsch brothers, joint owners of Bi-County Distributors in Long Island, had their entire bank account drained by the Internal Revenue Service working in conjunction with Lynch’s office. Many of Bi-County’s customers paid in cash, and when the brothers made several deposits under $10,000, federal agents accused them of “structuring” their deposits in order to avoid the reporting requirements of the Bank Secrecy Act. Without so much as a criminal charge, the federal government emptied the account, totaling $446,651.11.

For more than two years, and in defiance of the 60-day deadline for the initiation of proceedings included in the Civil Asset Forfeiture Reform Act of 2000, Lynch’s office simply sat on the money while the Hirsch brothers survived off the goodwill their business had engendered with its vendors over the decades.

Today the Washington Post is starting a series of articles entitled, “Stop and Seize,” which take a critical look at the power of the government to take cash away from people using civil asset forfeiture laws. Here are a few of the findings from the Post investigation:

There have been 61,998 cash seizures made on highways and elsewhere since 9/11 without search warrants or indictments through the Equitable Sharing Program, totaling more than $2.5 billion. State and local authorities kept more than $1.7 billion of that while Justice, Homeland Security and other federal agencies received $800 million. Half of the seizures were below $8,800.

Only a sixth of the seizures were legally challenged, in part because of the costs of legal action against the government. But in 41 percent of cases — 4,455 — where there was a challenge, the government agreed to return money. The appeals process took more than a year in 40 percent of those cases and often required owners of the cash to sign agreements not to sue police over the seizures.

Hundreds of state and local departments and drug task forces appear to rely on seized cash, despite a federal ban on the money to pay salaries or otherwise support budgets. The Post found that 298 departments and 210 task forces have seized the equivalent of 20 percent or more of their annual budgets since 2008.

Agencies with police known to be participating in the Black Asphalt intelligence network have seen a 32 percent jump in seizures beginning in 2005, three times the rate of other police departments. Desert Snow-trained officers reported more than $427 million in cash seizures during highway stops in just one five-year period, according to company officials. More than 25,000 police have belonged to Black Asphalt, company officials said.

Behind the numbers are real people and today’s article explains how these police practices impact their lives. One of the victims mentioned is Mandrel Stuart:

Mandrel Stuart, a 35-year-old African American owner of a small barbecue restaurant in Staunton, Va., was stunned when police took $17,550 from him during a stop in 2012 for a minor traffic infraction on Interstate 66 in Fairfax. He rejected a settlement with the government for half of his money and demanded a jury trial. He eventually got his money back but lost his business because he didn’t have the cash to pay his overhead. “I paid taxes on that money. I worked for that money,” Stuart said. “Why should I give them my money?”

The Institute for Justice has produced a study, Policing for Profit, which highlights the abuse of civil asset forfeiture laws. Law enforcement agencies are empowered across the nation to seize and keep property suspected of involvement in criminal activity. Unlike criminal asset forfeiture, however, with civil forfeiture, a property owner need not be found guilty of a crime—or even charged—to permanently lose her cash, car, home or other property.

Most state laws are written in such a way as to encourage police agents to pursue profit instead of seeking the neutral administration of justice. The report grades each state and the federal government on its forfeiture laws and other measures of abuse. The results are appalling: Six states earned an F and 29 states and the federal government received a grade of D.

Institute for Justice has more on the report here, including a video showing the injustice created by these laws.

Cato is holding an event to highlight the findings of this report on Wednesday, April 28. Please join us for a discussion of policing, constitutional rights, and government accountability. You can register here.

Our friends at the Institute for Justice just released a comprehensive report on the abuses that go on under the legal procedure known as “civil asset forfeiture.” The report is called Policing for Profit(pdf). Here is a short video clip that IJ put together:

Senior IJ attorney Scott Bullock will be speaking on this subject here at the Cato Institute on April 28. Details on that event are forthcoming.